EQUITY PURCHASE AGREEMENT
Exhibit 10.72
THIS
EQUITY PURCHASE AGREEMENT (“Agreement”) is made as of the
20th day of April, 2010 by and among NATURALNANO, INC., a Nevada corporation
with offices at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (“NATURALNANO”),
WorldWide Medical Solutions, LLC, a New York limited liability company with
offices at 00 Xxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (“WMS”) and COMBOTEXS,
LLC, a New York limited liability company with offices at 00 Xxxxxx Xxxxx,
Xxxxxxxxx, XX 00000 (“COMBOTEXS”).
WHEREAS,
COMBOTEXS is a limited liability company organized and existing under the laws
of the State of New York, wholly owned by WMS and engaged in the business of
commercializing nano materials for the commercial, military and industrial
markets; and
WHEREAS,
NATURALNANO is a corporation organized and existing under the laws of the State
of Nevada and is a supplier of Halloysite nano tubes and other nano materials
for commercial users;
NOW
THERFORE, in consideration of One Dollar ($1.00) and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parties hereto
agree as follows:
1. Purchase by NaturalNano of
51% Interest in COMBOTEXS.
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1.1
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Issuance of
Common Stock
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(a) Subject
to the terms and conditions of this Agreement, NATURALNANO agrees to
issue to WMS at the Closing 20,000,000 shares of Common Stock, without par
value, of NATURALNANO together with 40,000,000 Warrants [in the form as set
forth in Exhibit A] to purchase additional common shares, and WMS agrees to sell
to NATURALNANO a 51% equity interest in COMBOTEXS. The shares of
Common Stock issued to WMS pursuant to this Agreement shall be referred to in
this Agreement as the “NATURALNANO Shares.”
(b) The
Warrants (“Warrants”) shall entitle the holder to purchase shares of the
Company’s Common Stock equal to 1 share for each Warrant. The
Warrants shall have an exercise price of $0.05 per share (the “Warrant Exercise
Price”) for the first twenty Million shares of NATURALNANO; an exercise price of
$0.08 for the next Ten Million Warrants, and an exercise price of $0.10 per
share for the final Ten Million Warrants. The Warrants shall have a term of five
(5) years from and after the date on which they become exercisable and shall
include terms permitting cashless exercise. If NATURALNANO remains an
SEC reporting company, and separately reports COMBOTEXS’ revenue, the first
TWENTY Million (20,000,000) Warrants will become exercisable on the date that
NATURALNANO files a Form 10-Q, Form 10-K or any other filing with the SEC (“SEC
Filings”) that shows gross sales for COMBOTEXS, together with the gross sales
for COMBOTEX as shown on all SEC Filings filed by NATURALNANO from and after the
Closing Date, exceeding one million dollars ($1,000,000.00) in the aggregate,
net of sales or use taxes. The second TEN Million (10,000,000)
Warrants will become exercisable on the date that NATURALNANO files a SEC Filing
that shows gross sales for COMBOTEXS, together with the gross sales for
COMBOTEXS as shown on all other SEC Filings filed by NATURALNANO from and after
the Closing Date, exceeding three million dollars ($3,000,000.00) in the
aggregate, net of sales or use taxes. The final TEN Million
(10,000,000) Warrants will become exercisable on the first day of the first
month after NATURALNANO files a SEC Filing that shows gross sales for COMBOTEXS,
together with the gross sales for COMBOTEXS as shown on all
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other SEC
Filings filed by NATURALNANO after the Closing from and after the Closing Date,
exceeding four million dollars ($4,000,000) in the aggregate, net of sales or
use taxes. In the event that NATURALNANO shall cease to be an SEC
reporting company or otherwise cease reporting COMBOTEXS’ revenue on a
consolidated basis, the first TWENTY Million (20,000,000) Warrants will become
exercisable on the first day of the first month after the gross sales of
COMBOTEXS from and after the Closing Date, exceed one million dollars
($1,000,000.00) in the aggregate, net of sales or use taxes. The
second TEN Million (10,000,000) Warrants will become exercisable on the first
day of the first month after the gross sales of COMBOTEXS from and after the
Closing Date, exceed three million dollars ($3,000,000.00) in the aggregate, net
of sales or use taxes. The final TEN Million (10,000,000) Warrants
will become exercisable on the first day of the first month after the gross
sales of COMBOTEXS from and after the Closing Date, exceed four million dollars
($4,000,000) in the aggregate, net of sales or use taxes. In such
case, gross sales shall be as determined by COMBOTEXS’ internal accounting staff
or certified public accountants, and WMS shall have the right to conduct an
audit of such sales at any time, but not more than once in any calendar year.
Such audit shall be at WMS’s expense unless the gross sales as reported by
COMBOTEXS were below a threshold for the issuance of Warrants to WMS but the
audit determines that gross sales of COMBOTEXS actually exceeded the threshold
in question for the issuance of Warrants, in which case the audit will be at the
sole expense of
NATURALNANO. NATURALNANO and COMBOTEXS
agree to cooperate in such audit and provide sales and other records reasonably
necessary for such audit to WMS and its agents.
1.2. Closing;
Delivery.
(a) The purchase and sale of the
Shares shall take place at the offices of Xxxxxxx X. Xxxxxx, Esq., 0000 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, or at such other location as may be mutually
agreed by the parties, as soon as practicable following satisfaction of all
conditions to closing (“Closing”).
(b) At the
Closing, NATURALNANO shall deliver to WMS a share certificate representing the
NATURALNANO Shares or irrevocable instructions to its transfer agent instructing
said agent to issue the share certificate and a Warrant Agreement evidencing the
Warrants referenced herein, all as more fully described in Section 1.1 hereof
and in the form set forth in Exhibit A hereto, and WMS will deliver to
NATURALNANO a certificate evidencing NATURALNANO’s 51% ownership of
COMBOTEXS.
(c) Each
share certificate for the Shares shall carry a legend with respect to resale
under the Federal and State Securities Acts as follows:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH TRANSFER MAY BE AFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.”
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1.3. Defined Terms Used in this
Agreement. In addition to the terms defined above, the
following terms used in this Agreement shall be construed to have the meanings
set forth or referenced below.
“Affiliate” means, with respect
to any specified Person, any other Person who or which, directly or indirectly,
controls, is controlled by, or is under common control with such specified
Person, including, without limitation, any partner, officer, director, member or
employee of such Person and any venture capital fund now or hereafter existing
that is controlled by or under common control with one or more general partners
or managing members of, or shares the same management with, such
Person.
“Code” means the Internal
Revenue Code of 1986, as amended.
“COMBOTEXS Assets” means those
assets of COMBOTEXS as listed in Exhibit B annexed hereto and made a part
hereof.
“Key
Employee” means Xxxxx Xxxxxx.
“Knowledge,” including the phrase
“to NATURALNANO’s
knowledge,” shall mean the actual
knowledge after reasonable investigation of its Officers.
“Person” means any individual,
corporation, partnership, trust, limited liability company or other
entity.
“Securities Act” means the
Securities Act of 1933 and the rules and regulations promulgated
thereunder.
“Warrants” are certificates
issued at Closing entitling the holder to purchase common shares in NATURALNANO
pursuant to the terms set forth in Section 1.1 (b) hereof and the Warrant
Agreement, and in the form set forth in Exhibit A.
2. Representations and
Warranties of NATURALNANO. NATURALNANO hereby represents and
warrants to WMS that, except as set forth on the Disclosure Schedule attached as
Exhibit B to
this Agreement, which exceptions shall be deemed to be part of the
representations and warranties made hereunder, the following representations are
true and complete as of the date of the Closing. The Disclosure
Schedule shall be arranged in sections corresponding to the numbered and
lettered sections and subsections contained in this Section 2, and the
disclosures in any section or subsection of the Disclosure Schedule shall
qualify other sections and subsections in this Section 2 only to the
extent it is readily apparent from a reading of the disclosure that such
disclosure is applicable to such other sections and
subsections. NATURALNANO may provide data in the Disclosure Schedule
by reference to one or more of its SEC filings, provided that it itemize the
specific disclosure and the specific filing to which it refers.
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2.1. Organization, Good Standing,
Corporate Power and Qualification. NATURALNANO is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada, is duly qualified to conduct business in the State of
New York, and has all requisite corporate power and authority to own or lease
its properties and to carry on its business as presently conducted and as
proposed to be conducted. NATURALNANO is duly qualified to transact
business and is in good standing in each jurisdiction in which the nature of the
activities conducted by it and/or the character of the assets owned or leased by
it makes such license or qualification necessary, each such jurisdiction being
listed in the Disclosure Schedule.
2.2. Capitalization. NATURALNANO has authorized
capital stock consisting of 5,000,000,000 shares of common stock, $0.001
par value, of which 107,957,045
shares are presently issued and outstanding, and 10,000,000 shares of preferred
stock, of which 750,000 are Series B and 4,250,000 are Series C, all of which
are fully paid, validly issued and non-assessable. NATURALNANO does
not have outstanding any options, warrants, contracts to issue, convertible debt
securities or any other rights or commitments entitling anyone to acquire shares
of its capital stock, other than as set forth in the Disclosure
Schedule.
2.3. Authorization. All
corporate action required to be taken by NATURAL NANO’s Board of Directors in
order to authorize NATURALNANO to enter into this Agreement and the Warrant
Agreement, and to issue the Shares and Warrants at the Closing, has been taken
or will be taken prior to the Closing. All action on the part of the
officers, directors and/or shareholders of NATURALNANO necessary for the
execution and delivery of this Agreement and the Warrant Agreement, the
performance of all obligations of NATURAL NANO under this Agreement and the
Warrant Agreement to be performed as of the Closing, and the issuance and
delivery of the Shares and Warrants, has been taken or will be taken prior to
the Closing. This Agreement, and the Warrant Agreement, when executed
and delivered by NATURALNANO, shall constitute valid and legally binding
obligations of NATURALNANO, enforceable against NATURALNANO in
accordance with their respective terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or
other laws of general application relating to or affecting the enforcement of
creditors’ rights generally, or (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
2.4. Valid Issuance of
Shares. The NATURALNANO Shares and any shares of NATURALNANO
common stock issued upon conversion of the Warrants, when issued, and delivered
in accordance with the terms and for the consideration set forth in this
Agreement, will be validly issued, fully paid and nonassessable and free of
restrictions on transfer other than restrictions on transfer under applicable
state and federal securities laws. The Warrants, when issued and
delivered in accordance with the terms and for the consideration set forth in
this Agreement and in the Warrant Agreement, will be validly issued and free of
restrictions on transfer other than restrictions on transfer under applicable
state and federal securities laws.
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2.5. Governmental Consents and
Filings. The execution and delivery of this Agreement and the
Warrant Agreement, the issuance of the Shares and Warrants pursuant hereto and
the consummation of the transactions provided hereunder does not require any
third party consent and does not violate, conflict with, result in the breach
of, or cause a default under any provision of NATURALNANO’s certificate of
incorporation or bylaws or any obligation, mortgage, agreement, law, order,
judgment, decree or any other restriction to which NATURALNANO is a party or by
which NATURALNANO is subject or bound. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of NATURALNANO in connection with the execution of this Agreement or
the Warrant Agreement, the issuance of the Shares and Warrants or the
consummation of the transactions contemplated by this Agreement or the Warrant
Agreement.
2.6. Litigation. There
is no claim, action, suit, proceeding, arbitration, complaint, charge or
investigation pending or to NATURALNANO’s or Key Employee’s knowledge, currently
threatened (i) against NATURALNANO or any officer, director or Key Employee
of NATURALNANO; or (ii) that questions the validity of this Agreement
or the Warrant Agreement or the right of NATURALNANO to enter into those
Agreements, or to consummate the transactions contemplated by those Agreements
or to issue the Shares or Warrants contemplated to be issued hereunder; and
neither NATRUALNANO nor any Key Employee knows any fact which could form the
basis for any such claim, action, suit, complaint, charge or investigation, that
would reasonably be expected to have, either individually or in the aggregate, a
material adverse effect on NATURALNANO or its business. Neither
NATURALNANO nor, to NATURALNANO’s knowledge, any of its officers, directors or
Key Employee is a party or is named as subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality (in the case of officers, directors or Key Employees, such as
would affect NATURALNANO). There is no action, suit, proceeding or
investigation by NATURALNANO pending or which NATURALNANO intends to
initiate. The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or threatened in writing (or any basis
therefor known to NATURALNANO) involving the prior employment of any of
NATURALNANO’s employees, their services provided in connection with
NATURALNANO’s business, or any information or techniques allegedly proprietary
to any of their former employers, or their obligations under any agreements with
prior employers.
2.7. Financial
Statements. The
financial balance sheet and audited statements of NATURALNANO as of and for the
period ended December 31, 2008 and the unaudited balance sheet and financial
statements as of and for the period ended September 30, 2009, are a public
record (a) are in accordance with the books and records of NATURALNANO and any
subsidiaries of NATURALNANO, (b) present fully, fairly and accurately the
financial position of NATURALNANO as of said date and the operational results of
NATURALNANO for the period represented thereby, and (c) have been prepared in
accordance with Generally Accepted Accounting Principals consistently
applied. Such financial statements set forth all of the liabilities
and obligations of NATURALNANO, direct and indirect, contingent and accrued, of
any nature whatsoever, whether arising out of contract, tort, statute or
otherwise, except liabilities and obligations incurred in the ordinary course of
business subsequent to September 30, 2009.
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2.8. Tax Returns and
Payments. There are no federal,
state, county, local or foreign taxes due and payable by NATURALNANO which have
not been timely paid. There are no accrued and unpaid federal, state,
county, local or foreign taxes of NATURALNANO which are due, whether or not
assessed or disputed. There have been no examinations or audits of
any tax returns or reports by any applicable federal, state, local or foreign
governmental agency. NATURALNANO has duly and timely filed all
federal, state, county, local and foreign tax returns required to have been
filed by it, all such returns were true complete and correct when filed, and
there are in effect no waivers of applicable statutes of limitations with
respect to taxes for any year.
2.9. Insurance. NATURALNANO
has and will maintain in full force and effect fire and casualty insurance
policies with extended coverage, sufficient in amount (subject to reasonable
deductions) to allow it to replace any of its properties that might be damaged
or destroyed. All such policies have been issued by insurance
companies actively engaged in the insurance business and authorized to issue
policies in the State of New York.
2.10. Permits. To
the best of NATURALNANO’S knowledge, NATURALNANO has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business,
the lack of which could reasonably be expected to have a Material Adverse
Effect. NATURALNANO is not in default in any material respect under
any of such franchises, permits, licenses or other similar authority.
2.11 Disclosure; Absence of
Certain Changes. NATURALNANO has made available to WMS all the
information reasonably available to NATURALNANO that WMS have requested for
deciding whether to acquire the NATURALNANO Shares. No representation
or warranty of NATURALNANO contained in this Agreement, as qualified by the
Disclosure Schedule, and no certificate furnished or to be furnished to WMS at
the Closing contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were
made. It is understood that this representation is qualified by the
fact that NATURALNANO has not delivered to WMS, and has not been requested to
deliver, a private placement or similar memorandum or any written disclosure of
the types of information customarily furnished to purchasers of
securities. Except as set forth in the Disclosure Schedule hereto,
there has not been since September 31, 2009 any material change in the financial
condition, assets, liabilities or business of NATURALNANO, other than changes in
the ordinary course of business, none of which individually or in the aggregate,
have been materially adverse; any material transactions entered into or
liabilities or obligations incurred by NATURALNANO, or any sale, transfer,
encumbrance of or any contract to sell, transfer or encumber, and of its assets,
other than in the ordinary course of business; or any payment or declaration of
a bonus to any Key Employee or any payment or declaration of any dividend or
other distribution on or with respect to the capital stock in NATRUALNANO; or
any other event of any kind or character which would or could materially and
adversely affect NATURALNANO or its business or assets.
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3.
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Representations and
Warranties of WMS. WMS and Xxxxxxx Xxxxxxx, jointly and
severally, hereby represents and warrants to NATURALNANO
that:
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3.1. Authorization. WMS
is a limited liability company organized and existing in good standing under the
laws of the State of New York, and has full power and authority to enter into
this Agreement. This Agreement, when executed and delivered by WMS,
will constitute a valid and legally binding obligation of WMS, enforceable in
accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and any other
laws of general application affecting enforcement of creditors’ rights
generally, and as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
3.2. Purchase Entirely for Own
Account. This Agreement is made with WMS in reliance upon
WMS’s representation to NATURALNANO, which by WMS’s execution of this Agreement,
WMS hereby confirms, that the Shares, the Warrant and the shares of common stock
to be issued upon due exercise of the Warrant (the “Warrant Shares”) to be
acquired by WMS will be acquired for investment for WMS’s own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that WMS has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing
this Agreement, WMS further represents that WMS does not presently
have any contract, undertaking, agreement or arrangement with any Person to
sell, transfer or grant participations to such Person or to any third Person,
with respect to any of the Shares, the Warrant or the Warrant Shares. WMS has
not been formed for the specific purpose of acquiring the Shares or the
Warrant.
3.3. Disclosure of
Information. WMS has had an opportunity to discuss
NATURALNANO’s business, management, financial affairs and the terms and
conditions of the offering of the Shares and the Warrant with NATURAL NANO’s
management and has had an opportunity to review NATURALNANO’s plans for the
future, but such representation shall not constitute a defense to NATURALNANO to
a claim or suit by WMS that NATURALNANO has breached this Agreement and/or the
representations and warranties of NATURALNANO set forth herein.
3.4. Restricted
Securities. WMS understands that neither the NATURALNANO
Shares nor the Warrants nor the Warrant Shares have been, and will not be,
registered under the Securities Act, by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of WMS’s
representations as expressed herein. WMS understands that the
NATURALNANO Shares, the Warrants and the Warrant Shares are “restricted
securities” under applicable U.S. federal and state securities laws and that,
pursuant to these laws, WMS may be required to hold the NATURALNANO Shares,
Warrants and Warrant Shares indefinitely unless they are registered with the
Securities and Exchange Commission and qualified by state authorities, or an
exemption from such registration and qualification requirements is
available. WMS acknowledges that NATURALNANO has no obligation to
register or qualify the NATURALNANO Shares, the Warrants or the Warrant Shares
for resale. WMS further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale, the
holding period for the NATURALNANO Shares, the Warrants or the Warrant Shares,
and on requirements relating to NATURALNANO which are outside of WMS’s control,
and which NATURALNANO is under no obligation and may not be able to
satisfy. Notwithstanding the
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foregoing,
NATURALNANO agrees to cooperate with WMS and will take such action as may be
necessary or appropriate, at the request of WMS, in the event WMS wishes to sell
or otherwise transfer some or all of the Shares or Warrants, or shares of
NATURALNANO stock issued upon the exercise of the Warrants, under Rule 144 or
145 under the Securities Act or other applicable provisions of the Securities
Act or state securities law or rules or regulations issued
thereunder. WMS understands that this offering is not intended to be
part of a public offering, and that WMF will not be able to rely on the
protection of Section 11 of the Securities Act.
3.5. Residence. The
office or offices of WMS in which its principal place of business is identified
in the address or addresses of WMS is set forth in the preamble to this
Agreement.
3.6. Assets in COMBOTEXS.
The listing of assets of COMBOTEXS as of Closing is set forth on Exhibit B
attached hereto and made a part hereof. WMS makes no representation
as to the condition of any of the Assets, other than the fact that Combotexs has
good and marketable title to each Asset, free and clear of any liens,
encumbrances or rights of third parties .
3.7. Organization, Good Standing,
Corporate Power and Qualification. COMBOTEXS is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of New York, is duly qualified to conduct business in the
State of New York, which is the only jurisdiction in which it does business, and
has all requisite corporate power and authority to own or lease its properties
and to carry on its business as presently conducted and as proposed to be
conducted.
3.8. Capitalization. Prior
to the transactions contemplated by this Agreement, all of the membership
interests of COMBOTEXS were owned by WMS. COMBOTEXS does not have
outstanding any options, warrants, contracts to issue, convertible debt
securities or any other rights or commitments entitling anyone to acquire shares
of its ownership interests.
3.9. Authorization. All
corporate action required to be taken by COMBOTEXS’s members and managers in
order to authorize COMBOTEXS to enter into this Agreement, and to issue the 51%
membership interest at
the Closing, has been taken or will be taken prior to the
Closing. All action on the part of the members and managers of
COMBOTEXS necessary for the execution and delivery of this Agreement, the
performance of all obligations of COMBOTEXS under this Agreement to be performed
as of the Closing, and the issuance and delivery of the membership interest has
been taken or will be taken prior to the Closing. This Agreement,
when executed and delivered by COMBOTEXS, shall constitute valid and legally
binding obligations of COMBOTEXS, enforceable against COMBOTEXS in accordance
with their respective terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of
general application relating to or affecting the enforcement of creditors’
rights generally, or (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable
remedies.
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3.10. Valid Issuance of Membership
Interest. The 51% membership interest in COMBOTEXS to be issued to
NATURALNANO at Closing in accordance with the terms and for the
consideration set forth in this Agreement, will be validly issued, fully paid
and nonassessable and free of restrictions on transfer other than restrictions
on transfer under applicable state and federal securities laws and the Operating
Agreement. Other than the Operating Agreement of COMBOTEXS, a copy of which has
been provided to NATURALNANO prior to the execution and delivery of this
Agreement but which will be superseded in its entirety by an Amended and
Restated Operating Agreement at Closing, and this Agreement, there are no
stockholders’ agreements, voting trust, proxies, options, rights of first
refusal or any other similar agreements or understandings restricting the
transferability of the membership interests of COMBOTEXS.
3.11. Governmental Consents and
Filings. The execution and delivery of this Agreement, the
issuance of the membership interests pursuant hereto and the consummation of the
transactions provided hereunder does not require any third party consent and
does not violate, conflict with, result in the breach of, or cause a default
under any provision of COMBOTEXS’s or WMS’s respective Articles of Organization
or operating agreement or any obligation, mortgage, agreement, law, order
judgment, decree or any other restriction to which COMBOTEXS or WMS is a party
or by which COMBOTEXS or WMS or any of its respective assets is subject or
bound. No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority is required on the part of COMBOTEXS or WMS in
connection with the execution of this Agreement, the issuance of the membership
interest or the consummation of the transactions contemplated by this
Agreement.
3.12. Litigation. There
is no claim, action, suit, proceeding, arbitration, complaint, charge or
investigation pending or to COMBOTEXS or WMS’s knowledge, currently threatened
(i) against COMBOTEX or WMS or any officer, director or employee thereof; or
(ii) that questions the validity of this Agreement or the right of either
COMBOTEXS or WMS to enter into it, or to consummate the transactions
contemplated by this Agreement or to issue the membership interests contemplated
to be issued hereunder; and neither COMBOTEXS or WMS knows any fact which could
form the basis for any such claim, action, suit, complaint, charge or
investigation, that would reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect. Neither COMBOTEXS nor
WMS nor, to either of its respective knowledge, any of its officers, directors
or employees is a party or is named as subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality (in the case of officers, directors or employees, such as would
affect COMBOTEXS or WMS). There is no action, suit, proceeding or
investigation by COMBOTEXS or WMS pending or which COMBOTEXS or WMS intends to
initiate. The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or threatened in writing (or any basis
therefore known to COMBOTEXS or WMS) involving the prior employment of any of
COMBOTEXS’s or WMS’s employees, their respective services provided in connection
with its business, or any information or techniques allegedly proprietary to any
of their former employers, or their obligations under any agreements with prior
employers.
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3.13. Tax Returns and
Payments. There are no federal,
state, county, local or foreign taxes due and payable by COMBOTEXS, WMS or its
members which have not been timely paid. There are no accrued and
unpaid federal, state, county, local or foreign taxes of COMBOTEXS or WMS which
are due, whether or not assessed or disputed. There have been no
examinations or audits of any tax returns or reports by any applicable federal,
state, local or foreign governmental agency. COMBOTEXS AND WMS have
each duly and timely filed all federal, state, county, local and foreign tax
returns required to have been filed by it, all such returns were true complete
and correct when filed, and there are in effect no waivers of applicable
statutes of limitations with respect to taxes for any year.
3.14. Permits. COMBOTEXS
has all franchises, permits, licenses and any similar authority necessary for
the conduct of its business, the lack of which could reasonably be expected to
have a Material Adverse Effect. COMBOTEXS is not in default in any
respect under any of such franchises, permits, licenses or other similar
authority.
3.15. Disclosure; Absence of
Certain Changes. WMS has made available to NATURALNANO all the
information reasonably available to WMS that NATURALNANO has requested for
deciding whether to acquire the membership interests. No
representation or warranty of either WMS or COMBOTEXS contained in this
Agreement, as qualified by the Disclosure Schedule, and no certificate furnished
or to be furnished to NATURALNANO at the Closing contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances under which they were made. It is understood that this
representation is qualified by the fact that WMS has not delivered to
NATURALNANO, and has not been requested to deliver, a private placement or
similar memorandum or any written disclosure of the types of information
customarily furnished to purchasers of securities. Other than the
acquisition by all of the ownership interests in COMBOTEXS by WMS, there has not
been since December 31, 2009 any material change in the financial condition,
assets, liabilities or business of WMS or COMBOTEXS, other than changes in the
ordinary course of business, none of which individually or in the aggregate,
have been materially adverse; any material transactions entered into or
liabilities or obligations incurred by WMS or COMBOTEXS, or any sale, transfer,
encumbrance of or any contract to sell, transfer or encumber, and of its assets,
other than in the ordinary course of business; or any payment or declaration of
a bonus to any employee or any payment or declaration of any dividend or other
distribution on or with respect to the membership interests in COMBOTEXS; or any
other event of any kind or character which would or could materially and
adversely affect COMBOTEXS or its business or assets.
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4.
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Conditions to WMS’s
Obligations at Closing. The obligations of WMS to
complete the transactions contemplated by its Agreement and the Warrant
Agreement, to purchase the Shares and Warrants and to sell a 51% interest
in COMBOTEXS to NATURALNANO at the Closing are subject to the fulfillment
by NATURALNANO, on or before such Closing, of each of the following
conditions, unless otherwise
waived:
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4.1
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Representations and
Warranties. The representations and warranties of NATURALNANO
contained in Section 2
and the Exhibits related thereto, shall be true and correct in all
respects as of the date hereof and as of the
Closing.
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4.2
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Performance. NATURALNANO
shall have performed and complied with all covenants, agreements,
obligations and conditions contained in this Agreement that are required
to be performed or complied with by NATURALNANO on or before the
Closing.
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4.3
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Delivery
of Documents. WMS shall have received all documents,
certificates, agreements and other papers required of NATURALNANO pursuant
to the terms hereof or as requested by WMS in connection therewith, in
form and substance as approved by counsel to WMS, including specifically
but not limited to:
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4.3.1 Certificates
representing the NATURALNANO Shares or the letter to the transfer agent provided
for in Section 11.2(b) and the Warrants and the Warrant Agreement, executed and
delivered by NATURALNANO.
4.3.2 A
certificate of resolutions adopted by NATURALNANO’s Board of Directors
authorizing the execution of this Agreement, the issuance of the Shares and the
Warrants, the consummation of the transactions contemplated hereby and the
execution and delivery of the documents required to be delivered hereunder,
certified by NATURALNANO’s Secretary.
4.3.3 A
certificate dated as of the Closing Date to the effect that, as of the date of
this Agreement and as of the Closing Date, all of the representations and
warranties of NATURALNANO contained in this Agreement and the Schedules hereto
in the Warranty Agreement are true, correct and complete and that all of the
agreements, covenants and conditions contained in this Agreement and the
Warranty Agreement to be performed or satisfied by NATURALNANO, its shareholders
and/or its Key Employee prior to the Closing have been performed or satisfied,
such certificate to be executed by the President and Secretary of NATURALNANO
and its Key Employee.
4.3.4 An
Amended Operating Agreement of COMBOTEXS, executed by NATURALNANO.
4.4 Qualifications. All
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Shares pursuant to this
Agreement shall be obtained and effective as of the Closing.
4.5 Proceedings and
Documents. All corporate and other proceedings in connection
with the transactions contemplated at the Closing and all documents incident
thereto shall be reasonably satisfactory in form and substance to WMS, and WMS
(or its counsel) shall have received all such counterpart original and certified
or other copies of such documents as reasonably requested. Such
documents may include good standing certificates, judgment and franchise tax
searches with respect to NATURALNANO.
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5. Conditions to NATURALNANO’s
Obligations at Closing. The obligation of NATURALNANO to
complete the transactions contemplated by this Agreement, to issue Shares and
Warrants to WMS, and to purchase a 51% interest in COMBOTEXS at the Closing is
subject to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived:
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5.1
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Representations and
Warranties. The
representations and warranties of WMS contained in Section 3
and the Exhibits related thereto, shall be true and correct in all
respects as of the Closing.
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5.2
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Performance. WMS
shall have performed and complied with all covenants, agreements,
obligations and conditions contained in this Agreement that are required
to be performed or complied with by it on or before the
Closing.
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5.3
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Qualifications. All
authorizations, approvals or permits, if any, of any governmental
authority or regulatory body of the United States or of any state that are
required in connection with the lawful issuance and sale of the Share
pursuant to this Agreement shall be obtained and effective as of the
Closing.
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5.4
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Operating
Agreement. An Amended Operating Agreement for COMBOTEXS,
executed by WMS.
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5.5
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Certificates
representing a 51% interest in COMBOTEXS, executed and delivered to
NATURALNANO by COMBOTEX.
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5.6
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Certificate. A
certificate of resolutions adopted by COMBOTEXS’s and WMS’s Managing
Member authorizing the execution of this Agreement, the issuance of the
51% interest to NATURALNANO, the consummation of the transactions
contemplated hereby and the execution and delivery of the documents
required to be delivered hereunder, certified by the Managing Member of
each of COMBOTEXS and WMS.
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6. Miscellaneous.
6.1 Survival of Representations
and Warranties. Unless otherwise set forth in this Agreement,
the representations and warranties of NATURALNANO and WMS contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing and shall in no way be affected by any investigation
or knowledge of the subject matter thereof made by or on behalf of WMS or
NATURALNANO.
6.2 Successors and
Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
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6.3 Governing
Law. This Agreement and any controversy arising out of or
relating to this Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York, without regard to conflict of law
principles that would result in the application of any law other than the law of
the State of New York.
6.4 Counterparts;
Facsimile. This Agreement may be executed and delivered by
facsimile signature and in any number of counterparts. It is not
necessary that all parties sign all or any one of the counterparts, but each
party must sign at least one counterpart for this Agreement to be
effective.
6.5 Titles and
Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
6.6 Notices. All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid, or (d) one business (1) day after deposit with a nationally recognized
overnight courier, specifying next business day delivery, with written
verification of receipt. All communications shall be sent to the
respective parties at their address as set forth on the signature page or Exhibit A, with
copies thereof to their attorneys, in the case of WMS, to Xxxxxxx X. Xxxxxx,
Esq., 0000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, and in the case of
NATURALNANO, to Xxxxx Xxxxx & Associates, PLLC, 0 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx Xxxxxx, XX 00000,xx to such address as subsequently modified by
written notice given in accordance with this Section
6.6.
6.7 No Finder’s
Fees. Each party represents that it neither is nor will
be obligated for any finder’s fee or commission in connection with this
transaction. WMS agrees to indemnify and to hold harmless NATURALNANO
from any liability for any commission or compensation in the nature of a
finder’s or broker’s fee arising out of this transaction (and the costs and
expenses of defending against such liability or asserted liability) for which
each WMS or any of its officers, employees, or representatives is
responsible. NATURALNANO agrees to indemnify and hold harmless WMS
from any liability for any commission or compensation in the nature of a
finder’s or broker’s fee arising out of this transaction (and the costs and
expenses of defending against such liability or asserted liability) for which
NATURALNANO or any of its officers, employees or representatives
is responsible.
6.8. Attorney’s
Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of this
Agreement and/or the Warranty Agreement, the prevailing party shall be entitled
to reasonable attorney’s fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled. Attorney’s fees
for the preparation and negotiation of this Agreement and/or the Warranty
Agreement are responsibility of each party.
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6.9 Amendments and
Waivers. No term of this Agreement may be amended, terminated
or waived except in writing executed by the parties hereto.
6.10 Severability. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
6.11 Delays or
Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party under this Agreement, upon any breach or default
of any other party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not
alternative.
6.12 Entire
Agreement. This Agreement (including the Exhibits hereto)
constitute the full and entire understanding and agreement between the parties
with respect to the subject matter hereof, and any other written or oral
agreement relating to the subject matter hereof existing between the parties are
expressly canceled. No course of dealing between or among any of the
parties hereto will be deemed to modify, amend or discharge any part of this
Agreement or the rights or obligations of any party hereunder.
6.13 Dispute
Resolution. The parties (a) hereby irrevocably and
unconditionally submit to the jurisdiction of the state courts of the State of
New York located in Monroe County, New York and to the jurisdiction of the
United States District Court for the Western District of New York for the
purpose of any suit, action or other proceeding arising out of or based upon
this Agreement, (b) agree not to commence any suit, action or other proceeding
arising out of or based upon this Agreement except in the state courts of the
State of New York located in Monroe County, New York or the United States
District Court for the Western District of New York, and (c) hereby waive, and
agree not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt or immune
from attachment or execution, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
[Remainder
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
NATURALNANO,
INC.
By: /s/
Xxx Xxxxxx
Xxx Xxxxxx
President and CEO
Worldwide
Medical Solutions, LLC
By:/s/
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Managing Member
